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London - The euro headed for its worst week in a year as Donald Trump’s win in the US presidential race stirred up investor concern over populist outcomes in European votes.
Markets in the euro region potentially have turbulent period ahead with an Italian constitutional referendum in December and elections in France, Germany and the Netherlands next year that may kick out ruling parties or coalitions and overturn economic policies.
That’s led to a flight to the Swiss franc as a safe haven, causing the currency to rise to the highest versus the euro since June on Friday. The single currency is on track for a 2.4% drop against the dollar since last Friday and set for its worst week versus the pound since July.
“The euro is under pressure because of focus on the near-term political events,” said Georgette Boele, a currency strategist at ABN Amro Bank in Amsterdam. “The Trump victory has resulted in concerns that we could see similar outcomes in the elections in Europe.”
The euro weakened 0.1% to $1.0879 as of 13:03. The Swiss franc appreciated 0.2% to 1.07287 per euro and earlier touched 1.07103, its strongest level since June.
A jump by the franc on Wednesday following the US result would have been even higher if it wasn’t for the SNB’s intolerance of franc volatilty, according to strategists at Banco Bilbao Vizcaya Argentaria SA and UBS’s wealth management unit.
The SNB could intervene further “if upward pressure on the Swiss franc becomes too large,” Boele said.
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